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I love a startup going full-throttle into an underserved, lucrative market. And that’s what Veridox is doing.

Due to the way timings worked out, we had to hold this interview until their funding round was complete, so we’ve got the details of their first external investment for you today, too.

Read on for a deep dive…

– Martin

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Veridox wants to bring insurance fraud detection into the AI age

Fraud is a massive problem for insurers, but tackling it isn’t always straightforward.

As Veridox founder Dan Sandler discovered, insurance companies are sometimes surprisingly less sophisticated than the people attempting to defraud them.

“We stumbled into this completely by accident. We had another product to track damages across vehicles. We started noticing a trend in the newspapers, saying that insurance companies were losing more and more money to fraud, and it kept pointing to motor insurance fraud.”

Sandler approached insurers to see how he could be of assistance, and he discovered that sometimes fraud detection is a manual process that involves investigating just a small proportion of claims.

“Most insurers think that they're catching a fraction of the amount of fraud that's going on, they just don’t know,” Sandler says.

Spotting an opportunity, Sandler has founded Veridox, which harnesses AI to help insurance companies detect fraud.

How it works

Veridox provides insurers with an API and a web portal, which both allow them to upload documents and images they want to assess for potential fraud.

For example, travel insurance fraud might involve someone editing a copy of their flight booking confirmation to inflate the price. Veridox will analyse the file, its metadata and other factors Sandler prefers to keep secret, to identify evidence of manipulation within seconds.

Beyond that, Veridox will help insurers with their next steps for taking action.

“It helps them to really understand what's going on. It provides all supporting evidence to prove fraud. We'll tell you exactly why we think it's fraudulent, and then they can do something with that information,” Sandler says.

“We've got a natural language chatbot, which they can then start speaking to. They can write repudiation letters; they can ask for further information; they can write reports; they can start writing court summaries, for example. They can do anything that they need to do, and they can do it within a matter of seconds, rather than days, or weeks, or months.”

The story so far

Sandler started his career as a solicitor, but quickly switched paths to the world of tech entrepreneurship, which he found more appealing.

His path to Veridox took him through founding a number of businesses, including a payments service for bars and restaurants called Tabb, and a peer-to-peer car sharing company. The need to track damages to the vehicles led him to build a startup called Damage Control, which offered an app for easily inspecting and recording incidents.

“It was exciting, and there was a lot happening, but I couldn't see the larger scale opportunity from a commercial point of view. And that's where people really started telling us about insurance fraud,” Sandler says.

“It really was a hook for me. It had the things that I really love, using a new technology for a problem that's worth more than most economies across the world, and it's a largely untapped market… I couldn't get the idea out of my head. We tried it, it worked right away, and it's just been growing from there.”

Sandler started the company with outsourced development, but has now brought it in-house with a small team including Joey Clover, who he previously worked with on Tabb, as CTO.

Sandler says Veridox is currently working with 15 insurers as development partners, including some large UK names. The plan is to open up to more customers in the coming months, and he says there’s a “huge” waiting list.

“If I let them all in now, it's just going to overwhelm us, so I need to be sensible about it.

“I care more about long-term sustainability and value for the customer than I do about vanity metrics. I care about relationships with the customers and making sure that we're solving the problems that they need us to, rather than trying to get to £100 million ARR in the next six months.”

Funding:

Veridox started out self-funded by Sandler. He says he learned a lot about funding a startup early in his journey, back with his first business, See My Path.

“I raised too much, too soon, for a person who had no experience… I was too naive, and it gave me too long of a runway when I didn't know what I was doing.

“With this one, I really wanted to get to the point where I could at least prove the business was going to work before I went to raise money. So I was very keen to put my own money in first.”

And that’s what he has done. Today, Veridox announced that it has raised a £1 million round led by Outward VC, with participation from Solo Investments Holdings Limited, the investment company of Solly Solomou, best known for founding LADbible.

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